Saudi cleric cites crisis to press for sharia

By Abeer Allam in Arafat and Reuters

Published: December 7 2008 23:16 | Last updated: December 7 2008 23:16

Saudi Arabia’s top cleric has used his annual sermon to Muslim pilgrims assembling for hajj to urge Muslim countries to renounce capitalism and form an Islamic economic bloc that adopts interest-free finance.

Grand Mufti Abdelaziz Al al-Sheikh told worshippers assembling on the plain of Mount Arafat that global economies now caught in crisis were suffering the result of using interest as a bedrock of their financial systems. Under Islamic law, or sharia, paying or receiving interest is forbidden.

The crisis, he said, demonstrated that “Muslim countries must have sharia-compliant economies and unite to become a formidable economic power”.

Islamic banks, which grew rapidly in the Gulf region in recent years from an influx of oil receipts, often depend on retail deposits rather than money markets for funding. As a result, sharia-compliant banks generally demand strong collateral, which some argue is why their exposure to toxic loans is limited.

The white-bearded mufti, wearing the traditional white robes of the pilgrim, also warned young Muslims to stay away from the corrupting influences of the modern media, which he termed “ideological terror” and said was targeting them.

The mufti’s economic edicts are meant to serve more for spiritual guidance,

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